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Sport and culture often have no impact on local growth – they are valuable for other reasons

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What a couple of days it’s been for sports fans. The 2014 Tour de France began in gloriously sunny Yorkshire, Cambridge and then London, Wimbledon concluded with two great finals and Lewis Hamilton won his home F1 race. These events were watched and enjoyed by millions in person and on TV and remind us that sports and culture have intrinsic value which is unrelated to the economy.

This intrinsic value is not disputed. However, in recent decades, there has been an increasing tendency for promoters of major sport and cultural events or facilities to claim that undertaking such projects will have demonstrable direct and indirect economic benefits.

With this in mind the latest evidence review published yesterday by the What Work Centre for Local Economic Growth explores the evidence base in relation to these ‘economic’ claims.

The review considered over 550 policy evaluations and evidence reviews from the UK and other OECD countries and found 36 impact evaluations that met the Centre’s minimum standards. The majority of the evaluations (33 of 36) looked at sports interventions; only three looked at cultural events or facilities. The evaluations included a variety of sports and scales of event: from international (such as the Summer and Winter Olympic Games, Football and Rugby World Cups); to national (such as the Super Bowl); and local (such as college American Football games). The three cultural events looked at European Capitals of Culture, cultural districts across 99 US cities and New York art galleries.

The lack of culture project evaluations is significant, and somewhat perplexing. We didn’t even find an evaluation of the world famous Guggenheim Museum in Bilbao.

Overall the evaluations find that the measurable effects of sports and culture projects on a local economy tend to be small and are often zero. And that any wage and income effects are usually small and limited to workers in the immediate locality.

The review also found that facilities are more likely to have a positive impact on local property prices. For example, property prices have increased in neighbourhoods around new sports stadiums – up to 2% for the area within 1 km of the new Velodrome in Berlin and 15% for the area around the new Wembley Stadium in London.

Some projects have also been associated with increased trade imports and exports, including tourism, although these effects tend to be short lived. For example, an evaluation of Olympic Games held between 1948 and 2008 found a positive effect on exports. However, unsuccessful bidders also displayed similar positive effects, and so the impact is attributed to the ‘signal effect’ of bidding, i.e. that the host city is ‘open for business’ and trade.

The review also revealed a number of areas where there is a clear lack of evidence. These include:

  • No high quality evaluations of the impact of events and facilities on visitor numbers. This suggest far more should be done to assess the extent to which projects lead to net increases in visitor numbers for the area as a whole not just the for the project alone (asking attendees about spend, motivation for visit etc. do not provide strong evidence on the impact of projects on net visitor numbers).
  • Little evidence regarding cultural projects. This gap prevents us from understanding the likely impact of such projects and also limits our ability to compare the economic effects of different sport and cultural projects.
  • No robust evidence on the economic impacts of smaller projects (such as arts centres or small-scale festivals).

As we clearly state in the review sport and cultural projects have intrinsic value as well as promoting health and well-being, cultural enrichment, and prestige and branding. And whilst the main aims are not economic, policymakers often claim economic benefits for these interventions, and so economic impact evaluation is important to do.

To this end the findings should give some steer to policymakers thinking about the potential economic impacts of sports and cultural projects. They also highlight the gaps in the evidence base that both national and local policy-makers should look to fill. Over the coming months we’ll be working closely with LEPs, local authorities and national to address these issues. If you are interested in this policy area and want to improve our understanding of what works, please get in touch.

With le Tour now having departed, we can look forward to the Commonwealth Games in Glasgow and no amount of debate over economic benefits should spoil the pleasure of that.